IN THE UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF OHIO 

EASTERN DIVISION 

INDIANA MICHIGAN POWER CO., : 

 : Case No. 2:12-CV-861 

 Plaintiff, : 

 : JUDGE ALGENON L. MARBLEY 

vs. : 

 : Magistrate Judge Mark R. Abel 

SIEMENS ENERGY, INC., : 

 : 

 Defendant. : 

OPINION & ORDER 

I. INTRODUCTION 

 This matter is before the Court on Defendant Siemens Energy Inc.’s (“Siemens”) Motion 

to Dismiss (Doc. 34-1) Plaintiff Indiana Michigan Power Company’s (“IM”) Amended 

Complaint. (Doc. 33). Plaintiff sues Defendant alleging breach of contract (Count I), breach of 

warranty (Count II), and restitution (Count III). Defendant moves to dismiss Counts I and II for 

failure to state a claim upon which relief can be granted. (Doc. 34-1). For the foregoing reasons, 

Defendant’s Motion is GRANTED, and Counts I and II of this action are hereby DISMISSED. 

II. BACKGROUND 

A. Factual Background 

 Plaintiff, IM, is an Indiana corporation whose principle place of business is in Fort 

Wayne, Indiana. (Doc. 33 at ¶ 3). IM supplies electricity to more than a half million customers 

in Indiana and Michigan. (Id. at ¶ 8). Approximately one-third of that electricity is generated by 

the Cook Plant located in Michigan. (Id.). The Cook Plant consists of two systems – Unit 1 and 

Unit 2. (Id. at ¶ 9). 

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 Defendant, Siemens, is a Delaware corporation whose principle place of business is in 

Florida. (Doc. 35 at ¶ 4). Siemens sells turbine rotors and related equipment to corporations 

such as IM. 

In August 2004, IM and Siemens entered into Contract C-11468 (the “Contract”) for new 

low-pressure turbine rotors and related equipment to be designed, engineered, fabricated, loaded, 

transported, assembled, and installed by Siemens. (Doc. 33 at ¶ 10). IM agreed to pay Siemens 

a lump sum, the “Contract Price,” for the equipment and services provided pursuant to the 

Contract. (Doc. 17 at 4). The Contract between IM and Siemens had a price of $37,685,000. 

(Id. at 5). 

Two provisions in the Contract are at issue: Article 13, which provides for general 

Warranty (the “Warranty”); and Article 22, a Limitation of Liability under the Contract 

(“Limitation of Liability”). (Doc. 17). The Warranty provision contains six specific warranties 

covering different equipment, services, and issues; however, only the warranty covering “Major 

Equipment” is at issue sub judice. (Id. at 7). The Warranty provision in Article 13 states: 

[Siemens] warrants that the Major Equipment furnished to [IM], including any part 

repaired or replaced by [Siemens] during the Major Equipment Warranty Period, will be 

free of defects in workmanship and materials until ten (10) years from the date of 

shipment of the original Major Equipment to Owner (the Major Equipment Warranty 

Period). 

If during the Major Equipment Warranty Period [Siemens] is promptly notified in writing 

that the Major Equipment fails to conform to the Major Equipment Warranty, [Siemens] 

will at its option and expense correct such nonconformity by repair or replacement. 

(Id.). The remedies set forth in the Contract are IM’s exclusive remedies for defective or 

nonconforming equipment. (Id. at 12). Specifically, Article 19 provides that the guarantees and 

remedies are exclusive: 

The guarantees set forth in Articles 13 through 17 are exclusive and are in lieu of all 

other warranties whether statutory, express, or implied (including all warranties of 

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merchantability and fitness for a particular purpose, and all warranties arising from 

course of dealing or usage of trade). Correction of nonconformity in the manner and for 

the time period above shall constitute Contractor’s sole liability and Owner’s exclusive 

remedy for defective or nonconforming Equipment, Major Equipment, or Services 

whether claims of the Company are based in contract, in tort (including negligence and 

strict liability), or otherwise. 

(Id.).1 In addition to the general Warranty provision, the parties agreed to a provision limiting 

the liability of both parties in the event of repair or replacement of the turbine rotors. The 

Limitation of Liability states: 

The parties expressly agree that neither party nor its suppliers will under any 

circumstances be liable under any theory of recovery, whether based on contract, in tort 

(including negligence and strict liability), under warranty, or otherwise, for: any indirect, 

special, incidental or consequential loss or damage whatsoever; damage to or loss of 

property or equipment; loss of profits or revenue; loss of use of owner’s material, 

equipment or power system; loss of data; increased costs of any kind, including but not 

limited to capital cost, fuel cost and cost of purchased or replacement power; or claims of 

customers. Damage suffered as a result of the unauthorized disclosure of proprietary 

information shall not be considered an excluded damage under this section. 

The parties expressly agree that the remedies provided herein are exclusive and that 

under no circumstances shall the total aggregate liability of either party under any 

theory of recovery, whether based in contract, in tort (including negligence and strict 

liability), under warranty, or otherwise, exceed the total price paid to contractor under 

this agreement. 

The provisions of this article shall prevail over any conflicting or inconsistent provisions 

set forth elsewhere in this provision. 

(Doc. 17 at 13) (emphasis added). 

 In September 2008, two of the low-pressure turbines suffered damage when the turbine 

blades broke off their rotor while Unit 1 was at full power. (Doc. 33 at ¶ 12). IM shut down 

Unit 1 while the entire power train – the high-pressure turbine, three low-pressure turbines, 

electric generator, and supporting systems – and other related plant equipment were repaired. 

(Id.). 

                                                            

1

 Originally the Guarantees and Remedies in Article 19 were limited to Articles 14 through 17, but both parties 

amended the provision to include Article 13 and initialed the change. (Doc. 17 at 14). 

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 After the equipment failure, IM submitted a warranty claim to Siemens. (Id. at ¶ 13). 

Siemens acknowledged receipt of the claim and exercised its option under the Warranty to repair 

the warranted equipment instead of replacing it. (Id.). 

 In order to facilitate the repairs, IM shipped the damaged equipment from the Cook Plant 

in Michigan to a Siemens facility in North Carolina. (Doc. 33 at ¶ 14). The necessary work was 

performed by Siemens pursuant to the Parties’ 2009 Amendments to the 2004 Contract. (Doc. 

17-1). Siemens paid the costs up to the Contract Price, and required IM to pay for repair costs 

above the Contract Price. (Doc. 33 at ¶ 15). 

 In its initial complaint, IM alleged that Siemens improperly demanded money from IM in 

order to complete the repairs because the repairs were covered by the general Warranty within 

the contract. (Doc. 1). This Court dismissed those counts and found that the Limitation on 

Liability clause superseded the general warranty clause. (Doc. 24). IM now claims in its 

amended complaint that Siemens refused and/or failed to correct the equipment, and thus 

Siemens breached the contract and warranty. (Doc. 33 at ¶ 19). Specifically, IM alleges that the 

repairs that Siemens completed in 2009 were inadequate because the repaired equipment had to 

be replaced in 2011. (Doc. 41 at 15). IM states that the defect is that the repaired equipment 

would not be expected to last through the end of the ten year warranty period in the general 

Warranty. (Id.). IM does not posit any facts that suggest that IM notified Siemens of a defect 

after the repairs were completed, but instead IM states that Siemens already knew of the alleged 

defect. (Id.). IM seeks to amend its pleadings to include a letter from Siemens stating that the 

spindle and discs and La-1 and La-2 equipment parts are expected to have 33,600 life hours, 

approximately 3.8 years. (Doc. 44-1). 

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 In Count III, IM alleges that Siemens included improper charges for profit, “overhead,” 

and other items unrelated to the cost of the warranty repair (Doc. 33 at ¶ 16). This allegation is 

not addressed in Siemens’ Motion to Dismiss. 

 Siemens argues that, under the terms of the 2004 Contract, its aggregate liability of any 

claim is not to exceed the total price paid under the Contract. (Doc. 34-1 at 2). Siemens 

maintains that it repaired the equipment effectively, as evidenced by IM’s use of the repaired 

equipment from 2009-2011. (Id. at 2). Further, Siemens alleges that IM did not provide notice 

of any defect after receipt of the repaired equipment in 2009. (Id. at 6). Siemens contends that 

IM’s only possible claim for relief is restitution and that claims for breach of contract and breach 

of warranty are inapplicable. (Id.). 

B. Procedural Background 

 In September 2013, IM filed a Complaint in this Court alleging breach of contract, breach 

of warranty, and a claim for restitution. (Doc. 1). This Court dismissed the breach of contract 

and breach of warranty claims because the Limitation of Liability provision prevails over the 

more general Warranty provision, and Siemens fulfilled its obligations under the Limitation of 

Liability. (Doc. 24). IM thereafter amended its complaint (Doc. 33), and accordingly Siemens 

filed another Motion to Dismiss. (Doc. 34-1). 

 In Count I, IM alleges that the two parties entered into a valid Contract and IM performed 

all conditions precedent to Siemens’ liability under the Contract. (Doc. 33 at ¶¶ 20, 21). IM 

further alleges that Siemens did not perform its obligations under the Contract, thereby resulting 

in damages for IM. (Id. at ¶¶ 22, 23). 

 In Count II, IM makes two alternative allegations. First, IM argues that the parties 

entered into the Contract, including the general Warranty provision, and Siemens breached that 

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Warranty by refusing to correct the nonconformity in the Major Equipment. (Id. at ¶¶ 26, 27). 

In the alternative, IM alleges that if Siemens’ performance under the Warranty was adequate, 

then the remedy failed of its essential purpose. (Id. at ¶ 28). 

Both counts are the same as the claims that this Court already dismissed under 12(b)(6) 

except for the addition of a factual allegation that Siemens failed to repair the nonconformity in 

Major Equipment. (Doc. 33 at ¶ 19). 

As with the original complaint, Siemens moves to dismiss Counts I and II of IM’s 

Amended Complaint for failure to state a claim upon which relief can be granted pursuant to 

Rule 12(b)(6) of the Federal Rules of Civil Procedure. (Doc. 34-1). Siemens argues that Counts 

I and II require dismissal because enforcement of these Counts alleging Breach of Contract and 

Breach of Warranty would violate the express Limitation of Liability in the 2004 Contract, and 

IM gave no notification of any defect after repairs. (Id. at 13 at ¶ 3). Siemens does not seek to 

dismiss Count III at this time. IM opposes the Motion to Dismiss Counts I and II. (Doc. 41). 

The motions are fully briefed and ripe for decision. 

III. STANDARD OF REVIEW 

Federal Rule of Civil Procedure 12(b)(6) allows for a case to be dismissed for “failure to 

state a claim upon which relief can be granted.” Such a motion “is a test of the plaintiff's cause 

of action as stated in the complaint, not a challenge to the plaintiff's factual allegations.” Golden 

v. City of Columbus, 404 F.3d 950, 958–59 (6th Cir.2005). Thus, the Court must construe the 

complaint in the light most favorable to the non-moving party. Total Benefits Planning Agency, 

Inc. v. Anthem Blue Cross & Blue Shield, 552 F.3d 430, 434 (6th Cir.2008). But the Court is not 

required to accept as true mere legal conclusions unsupported by factual allegations. Ashcroft v. 

Iqbal, 556 U.S. 662, 664 (2009). Although liberal, Rule 12(b)(6) requires more than bare 

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assertions of legal conclusions. Allard v. Weitzman, 991 F.2d 1236, 1240 (6th Cir.1993) (citation 

omitted). Generally, a complaint must contain a “short and plain statement of the claim showing 

that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). But the complaint must “give the 

defendant fair notice of what the claim is, and the grounds upon which it rests.” Nader v. 

Blackwell, 545 F.3d 459, 470 (6th Cir.2008) (quoting Erickson v. Pardus, 551 U.S. 89, 93 

(2007)). In short, a complaint's factual allegations “must be enough to raise a right to relief 

above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). It must 

contain “enough facts to state a claim to relief that is plausible on its face.” Id. at 570. 

IV. LAW AND ANALYSIS 

A. Breach of Contract Analysis 

 In Count I, IM alleges that Siemens breached the contract by refusing properly to perform 

its obligations under the Contract. (Doc. 33 at ¶ 23). Specifically, IM argues that Siemens did 

not repair the Major Equipment to comply with the ten year Warranty. (Id. at ¶ 19). 

Under Ohio law, a plaintiff must satisfy four elements to establish a breach of contract 

claim: (1) the existence of a binding contract; (2) the non-breaching party performed its 

contractual obligations; (3) a breach in contractual obligations by the other party; and (4) the 

non-breaching party suffered damages as a result of the breach. McDonald v. Canton Med. Edn. 

Found., Inc., 995 N.E.2d 1216, 1221 (Ohio Ct. App. 2013); Wauseon Plaza Ltd. P'ship v. 

Wauseon Hardware Co., 156 Ohio App.3d 575, 582, 807 N.E.2d 953 (Ohio Ct. App. 2004). 

Neither party disputes the existence of a binding contract. The issue is whether Siemens 

breached through its repair of the Major Equipment. IM claims that the breach occurred when 

Siemens inadequately repaired the equipment so that it did not last through the ten year period 

required in the general Warranty. (Doc. 41 at 9). 

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 In its response, IM asserts two reasons this Court should deny Siemens’ Motion to 

Dismiss. First, it claims that it “alleged that Siemens has failed to comply with its obligations to 

repair the Major Equipment under the Contract. For this simple reason alone, the Court should 

deny Siemens’ motion.” (Doc. 41 at 10). But this Court is not required to accept as true mere 

legal conclusions unsupported by factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 664 

(2009). This Court already found, as a matter of law, that Siemens has already provided repair 

work up to its limit of liability in accordance with the Limitation of Liability. (Doc 24 at 12). 

Thus, IM’s first assertion fails. 

 Second, IM asserts that Siemens has refused and/or failed to repair the Major Equipment 

within a reasonable time and therefore the limited warranty does not meet its purpose and should 

not be enforced. (Doc. 41 at 10). It is true that a limitation on liability will fail “when evidence 

shows that the seller either refuses to repair or replace the goods or, despite attempting to repair, 

the seller was not able to cure its breach.” Nat'l Mulch & Seed, Inc. v. Rexius Forest ByProducts Inc., 2007 WL 894833, at *29 (S.D. Ohio 2007) (citing Abele v. Bayliner Marine 

Corp., 11 F. Supp. 2d 955, 960-61 (N.D. Ohio 1997)). But as this Court already held, the 

Limitation of Liability prevails over the general Warranty in the Contract. Indiana Michigan 

Power Co. v. Siemens Energy, Inc., 2013 WL 4537066, at *6 (S.D. Ohio 2013). Siemens 

expended the total price of the contract, over $37,000,000, while completing the repairs, so any 

allegation that Siemens refused to repair must fail. Furthermore, IM operated the repaired Unit I 

from 2009 until 2011, so an allegation that Siemens failed to repair cannot survive a motion to 

dismiss. 

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By assuming the maximum amount of expenditures outlined in the Limitation of 

Liability, Siemens fulfilled its obligations under the contract. Defendant’s Motion to Dismiss 

Count I is GRANTED. 

B. Breach of Warranty Claim 

 In Count II, IM asserts that Siemens breached the Warranty by refusing and/or failing to 

correct the defect in the equipment. (Doc. 33 at ¶ 27). Or in the alternative, if Siemens did 

perform under the Warranty, then IM contends the warranty failed of its essential purpose. (Id.

at ¶ 28). Siemens moves to dismiss these claims because: (1) it satisfied its obligations under 

Article 22 of the Contract; and (2) IM failed to notify Siemens of any defect in its repair work. 

(Doc. 34-1 at 6, ¶ 4). 

 For a proper breach of warranty claim in Ohio, a plaintiff must allege: (1) the existence 

of a warranty; (2) the product failed to perform as warranted; (3) the plaintiff provided the 

defendant with reasonable notice of the defect; and (4) the plaintiff suffered an injury as a result 

of the defect. Ultimax, Inc. v. Mercedes-Benz USA, LLC, 2008 WL 974036, at *9 (S.D. Ohio 

2008). For such a claim to survive a Motion to Dismiss, Plaintiff must plead facts that support 

all four necessary elements. 

The third element requires notice, and adequacy of notice is ordinarily a question of fact. 

See Kabco Equip. Specialists v. Budgetel, Inc., 2 Ohio App. 3d 58, 61, 440 N.E.2d 611, 614 

(Ohio Ct. App. 1981). But the Sixth Circuit ruled that a breach of warranty claim requires 

notification when a repair effort has failed. Standard Alliance Indus., Inc. v. Black Clawson Co., 

587 F.2d 813, 827 (6th Cir. 1978) (where the court reversed a jury verdict because the buyer did 

not notify seller that its repairs failed). A first notice of defect will not carry over to notify a 

seller of defect after repairs are complete. See id. The court reasoned that notice of defective 

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repairs would have alerted the seller to the possibility of litigation, which would have allowed 

the seller to attempt further repairs or gather evidentiary support for its repair and allowed for 

settlement discussion. See id. In Ohio, “[t]he content of the notification need merely be 

sufficient to let the seller know that the transaction is still troublesome and must be watched.” 

Ohio Rev. Code Ann. tit. 13 § 1302.65 (2012). 

 In the case sub judice, IM has not alleged that it notified Siemens at any point between 

2009 and 2011 that the repairs had failed. In fact, the Unit was operational during that time. IM 

only asserts one defect: the short life span of the equipment after repairs. IM contends that 

Siemens had notice of this alleged defect because the expected life hours of the equipment after 

repair (33,600 hours or 3.8 years) falls short of the Warranty’s ten year guarantee. (Doc. 41 at 

2). IM submits a letter from Siemens that includes the 33,600 hour life span for some of the 

repaired equipment as proof that Siemens was on notice. (Doc. 44-1). IM did not provide even 

minimal notice to Siemens. IM cannot assume that Siemens knew that IM considers the life 

hours to be a defect. Even though issues of notice are typically questions of fact, IM did not 

convey the minimum required notice, that “the transaction is troublesome and must be watched,” 

so this breach of warranty claim must fail. Tit. 13 § 1302.65. 

 Furthermore, even if IM had provided appropriate notice, Siemens could not be liable for 

additional repairs because of the Limitation of Liability. This Court already held that “[u]nder 

the Limitation of Liability, Siemens can under no circumstances be liable for any claims above 

the total Contract Price.” Indiana Michigan, 2013 WL 4537066, at *5. Siemens is not liable for 

additional repairs after it already expended the contract price in repairs, so IM’s breach of 

warranty claim fails. 

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C. Essential Purpose 

In the alternative, IM argues that even if Siemens did fully perform under the Contract 

and Warranty, then the remedy failed of its essential purpose because Siemens was unwilling 

and/or unable to cure the nonconformity. (Doc. 33 at ¶ 28). “A limited remedy fails of its 

essential purpose when the aggrieved party cannot obtain the intended benefit of the remedy for 

which it bargained.” Nat'l Mulch., 2007 WL 894833, at *29. A warranty’s essential purpose 

“typically fails when evidence shows that the seller either refuses to repair or replace the goods 

or, despite attempting repair, the seller was not able to cure its breach.” Id. 

Neither of those situations is present in the case sub judice. IM obtained the remedy for 

which it bargained because Siemens fulfilled its warranty obligations under the Limitation of 

Liability. And as discussed above, Siemens was neither unable nor unwilling to complete 

repairs. Rather, Siemens expended the total cost of the contract price on repairs, thereby 

returning Unit I back to operation. IM’s allegation that the remedy failed its essential purpose is 

therefore unsuccessful. 

V. CONCLUSION 

 For the foregoing reasons, this Court GRANTS Defendant Siemens’ Motion to Dismiss 

Counts I and II of IM’s complaint. 

IT IS SO ORDERED. 

 s/ Algenon L. Marbley 

 ALGENON L. MARBLEY 

 UNITED STATES DISTRICT JUDGE 

DATED: September 23, 2014 

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